Gordon, John
Steele, 1997, The Extraordinary Life
and Times of Our National Debt.
New York: Walker and Company. A highly readable and
insightful look at the U.S. political economy with
discussion of monetary and fiscal policy, the federal
debt, corporate and personal taxes, marginal tax rates,
progressive taxes, social engineering, three fatal flaws
of the Keynesian theoretical model, the gold standard,
fiat money, speculative bubbles, government bookkeeping,
cash versus double-entry accounting, company financial
reports, accounting shenanigans, investing in common
stocks, and evaluating securities. The real jewel of all
is the author's insight into human passions. On page 137,
"It might be called the Madison Effect, in honor of
James Madison's famous dictum that "Men love
Power." After all, until Keynes, politicians had not
needed economists for help with running the country any
more than they had needed astronomers. But Keynes made
them indispensable, and economists quickly realized that.
And the political power that Keynesianism has given
economists has made them, understandably, reluctant to
abandon it, despite its failures. Like socialism, the
theoretical promise of Keynesianism is so bright that its
failures have always been ascribed, among the believers,
to poor execution or minor flaws, not to fundamentally
faulty theory.

Gould, Stephen Jay,
revised and expanded 1996, The Mismeasure of
Man.New
York: W.W. Norton &Company. Introduction, pg. 19: The
original title for The Mismeasure of Man would
have honored my hero Charles Darwin for the wonderfully
incisive statement that he made about biological
determinism to climax his denunciation of slavery in the Voyage
of the Beagle. I wanted to call this book Great Is
Our Sin--from Darwin's line, cited as an epigraph on my
title page: "If the misery of our poor be caused not
by the laws of nature, but by our institutions, great is
our sin." The definitive refutation of the argument
of The Bell Curve, and a good contribution to
the sociology of science, especially scientific research
in the social sciences such as psychology and economics.

Hartmann, Thom, 1998, The
Last Hours of Ancient Sunlight : Waking Up to Personal
and Global Transformation. Northfield, VT:
Mythical Books. The general price level is a primary
determinant of the appropriate discount rate to use in
the traditional calculation of investment value. The
"core" Consumer Price Index excludes the
"high-noise" factors of energy and food.
Ancient sunlight refers to non-renewable energy resources
in the form of fossil fuels or coal, crude oil and
natural gas. The book argues that the dominant global
economy is inherently self-destructive and unstable due
to its over-centralization and the wasteful consumption
of its limited irreplaceable natural resources. Prior
civilizations have collapsed due to the debasement of
their currency, in turn due to the sudden rapid increases
in energy prices and inflation.

Hawken, Paul, 1993, The
Ecology of Commerce: A Declaration of Sustainability.
New York: HarperCollins. Practical, economically sound,
extensive, systematic analysis of business design and
culture. "Markets, so extremely effective at setting
prices, are not currently equipped to recognize the true
costs of producing goods. Because of this, business has
two contradictory forces operating upon it: the need to
achieve the lowest price in order to thrive if not
survive in the marketplace, and the the increasingly
urgent social demand that it internalize the expense of
acting more responsible toward the environment. Without
doubt, the single most damaging aspect of the present
economic system is that the expense of destroying the
earth is largely absent from the prices set in the
marketplace."

Hazlitt, Henry, 1979, Economics
in One Lesson : The Shortest and Surest Way to Understand
Basic Economics, New Edition, New York:
Random House Three Rivers Press. An analysis of economic
fallacies that influence government policies. The central
error is repeated throughout and is summarized at the
beginning of Chapter XV How the Price System Works on
page 103: "The whole argument of this book may be
summed up in the statement that in studying the effects
of any given economic proposal we must trace not merely
the immediate results but the results in the long run,
not merely the primary consequences but the secondary
consequences, and not merely the effects on some special
group but the effects on everyone." The fallacies
are the result of the special pleadings of selfish
interests represented by interest groups, and this
introduces the political dimension of government policy
and thus political economy. The main noteworthy omission
is an elaboration about market externalities which are
those things not included in the pricing process such as
environmental degradation. In addition, public policy
unavoidably overrides purely economic considerations, for
example, the subsidization of single-family housing
ownership in order to create a larger group of
stakeholders to stabilize society, thus a larger middle
class of citizens.

Jennergren, L. Peter,
June 16, 1998, A Tutorial on the McKinsey Model
for Valuation of Companies, Stockholm
School of Economics/EFI Working Paper Series in Business
Administration. This paper presents a simplification and
extension of the McKinsey model. See the book listing for
Copeland. Abstract: All steps of the McKinsey
model are outlined. Essential steps are: calculation of
free cash flow, forecasting of future accounting data
(profit and loss accounts and balance sheets), and
discounting of free cash flow. There is particular
emphasis on forecasting those balance sheet items which
relate to Property, Plant, and Equipment. There is an
exemplifying valuation included (of a company called
McKay) as an illustration. Includes downloads of the
paper, tables and a worked example.

Lefèvre, Edwin,
1994 (1923),Reminiscences of a Stock
Operator. New York: John Wiley &
Sons. Perspective of a full-time stock trader (as
contrasted to an investor) and his mindset. Every
long-term investor must one day buy and sell securities,
i.e. trade in the market, and these vicarious lessons may
help.

Lewis, Michael, 1989, Liar's
Poker : Rising Through the Wreckage on Wall Street,
New York: Penguin Books. A book about trading (as
contrasted to investment) with a behind-the-scenes look
at the chaos of trading, investment banking, and
corporate finance at some of the largest and most
powerful firms.

Lowe, Janet,
1994,Benjamin Graham on Value
Investing : Lessons from the Dean of Wall Street.
New York: Penguin Books. An attempt to make The
Intelligent Investor accessible to a general
audience. Includes an introduction to Benjamin Graham's
investment ideas, analysis of his thought process, and
his biography.

Lynch, Aaron,
1996, Thought Contagion : How Belief Spreads
Through Society. New York: Basic Books.
Introduces memetics, the new science of memes or
self-propagating ideas with an analogy to genetics and
the science of genes and their evolution. One explanation
of financial fads, manias and popular delusions in the
stock market.

Quinn, Daniel, 1992, Ishmael.
New York: Bantam Books. Explains why the world
is facing a man-made ecological crisis. Complements Jared
Diamond's Guns, Germs and Steel which explains
how we came to be facing this crisis.

Siegel, Jeremy J.,
1998, Stocks for the Long Run : The
Definitive Guide to Financial Market Returns and
Long-Term Investment Strategies. New York:
McGraw-Hill. Part I: The Verdict of History, Part II:
Stock Returns, Part III: Economic Environment of
Investing, Part IV: Stock Fluctuations in the Short Run,
Part V: Building Wealth through Stocks. Cites favorably with
approval an academic journal article by Rolf W. Banz
"The relationship between return and market value of
common stocks" JFE 41 (September 1986):
779-793, which is not valid due to the logical circularity
of market value (size) in the an econometric asset pricing
model. Banz (1986) is where the spurious size-effect anomaly and
small-cap fallacy originated, and it has the aspects of a hoax. Also
mentioned are the inexplicable short-term (one year or
less) seasonal calendar-effect anomalies in total
returns. The argument of the book is that U.S. stocks
have experienced total returns superior to bonds, bills,
and gold for periods of 20 years since the late 1800's
and thus can be expected to do so in the future. Yet past
performance is not a guarantee of future results. Mr. Siegel knew or had
reason to know that size, as measured by market capitalization, and
value, as measured by book-to-market equity ratio, are neither logically
valid nor scientifically valid as explanatory factors in an econometric
model of expected total return for stock-portfolio pricing. Yet Mr.
Siegel approves of the size and value risk factors in the Fama and
French Three-Factor Model of return, which is a fatal fallacy due to
violation of genuine method by vicious circular reasoning in the form of
what in econometrics is known as circular simultaneity..

Smith, Gordon V.,
1988, out-of-print, Corporate Valuation : A
Business and Professional Guide. New York:
John Wiley & Sons. Chapter 5 Valuing a Business,
"Valuing the Securities of a Business
Enterprise", 102. Assumes minority interests without
control. Includes special considerations such as degrees
of difficulty, premium for control, lack of marketability
and liquidity, non-operating property, special business
segments (holding companies, high-tech businesses,
regulated businesses, and mineral exploration
businesses), 105.

Stanley, Thomas J. and William
D. Danko, 1996, The Millionaire Next
Door : The Surprising Secrets of America's Wealth.
New York: Simon & Schuster. The academic researchers
discovered seven common denominators among those who
successfully build wealth. (1) They live well below their
means. (2) They allocate their time, energy and money
efficiently, in ways conducive to building wealth. (3)
They believe that financial independence is more
important than displaying high social status. (4) Their
parents did not provide economic outpatient care. (5)
Their adult children are economically self-sufficient.
(6) They are proficient in targeting market
opportunities. (7) They chose the right occupation. In
addition, he or she is a compulsive saver and investor.
He or she built wealth through discipline, sacrifice and
hard work.

Stevens, G. T., Jr.,
199n, The Economic Analysis Of Capital
Expenditures for Managers and Engineers.
Simon & Schuster. This book is intended for use as a
text in economic analysis. It is primarily concerned with
the techniques for evaluating and comparing capital
investments. It has some features that are not usually
included in a book of this type. These are (1) explicit
definitions of equity, operating, and total cash flows,
and (2) a detailed discussion of minimum annual revenue
requirements and their use in the evaluation of projects.
This book also includes certain new tax regulations that
are related to capital investments.

The Wall Street
Journal, 16 January 1997, "Traders
Laugh Off the Official Estimate on Earnings, Act on
Whispered Number", C1, C20. Small
investors are typically out of the loop, and the impact
is greatest in the case of fast growing, science and
technology companies.

Wasserstein, Bruce, Big Deal
: 2000 and Beyond, updated edition 2000,
originally published as Big Deal : The Battle for
Control of America's Leading Corporations. New York:
Warner Books. Updated edition includes mergers and
acquisitions in the digital age. Big
Deal part one is a history of mergers in the U.S.
with five "waves" from late 1800's to 2000.
Part two is about the corporate strategy behind mergers
and presents for models: (1) McKinsey's market share; (2)
Boston Consulting Group's three factors of (a) experience
curve, (b) product life cycle, and (c) portfolio balance
of four product types with different cash flow
characteristics; (3) Michael Porter's five forces of (a)
rivalry among competitors, (b) substitute products, (c)
potential entry, (d) bargaining power of suppliers, and
(e) bargaining power of buyers; and (4) Hamel and
Prahalad's core competencies. Part three discusses the
merger process and the structure and implementation of
merger deals. The 927-page book includes arguments for
and against mergers, a Bibliography (pp. 896-901), and a
detailed Index (pp. 902-927) that includes numerous
entries under the headings "Courts",
"Discounted cash flow model (DCF)",
"Management", "Shareholders",
"Shark repellents", and "Valuation."